One-glance verdict
Undervalued
$177.12 our estimate vs market $111.61
Wall Street consensus: $145.40 (-17.9% lower than our fair-value estimate)
37% below our estimate, below the bear case
Fundamentals snapshot
McGrath RentCorp
MGRC · NMS · Industrials · Rental & Leasing Services
Current price
$111.61
52-week range
$94.99 - $125.83
Market cap
$2.73B
Balance sheet
Watch
7.96x Adequate
Net debt $585.52M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 12.7% on equity, ahead of 66% of its peers.
- Reward Free cash flow was positive in 10/10 years.
- Risk Net debt grew 24.7% over 3 years.
- Risk Stock trades 8.6% above its 5-year average P/E.
What this company does
McGrath RentCorp
McGrath RentCorp is a rental company for other businesses, leasing out essential items like temporary classrooms for schools, mobile offices for construction sites, and specialized electronic testing equipment. The company makes most of its money from these rentals, which generates predictable recurring revenue (income that comes in consistently at regular intervals, like a subscription). This is important because customers often need these items for long periods, providing McGrath with a steady stream of cash.
How the company got here
McGrath RentCorp was founded in 1979 by Dennis McGrath, starting as a business that rented out modular buildings in California. Over the years, it grew from a single-focus rental company into a more diverse platform by expanding into different types of rentals. A key turning point was expanding into renting electronic test equipment and portable storage containers. The company also added the ability to manufacture its own modular classrooms. This strategy of focusing on specialized business-to-business rentals has shaped the company into what it is today.
What it actually does
McGrath RentCorp is a business-to-business rental company, which means it rents equipment to other companies rather than to individuals. Think of them as a specialty rental store for businesses that need things like temporary office spaces, classrooms, or storage containers. They also rent out sophisticated electronic test equipment for companies in the tech and aerospace industries. Instead of buying expensive assets they might only need for a specific project, companies can rent them from McGrath, giving them more flexibility.
Mobile Modular
This is the company's largest and original business, making up a significant portion of its income. It rents and sells modular buildings that can be used as temporary classrooms, construction site offices, healthcare clinics, or extra office space. Customers like school districts and construction companies pay to use these buildings for a specific period. This segment also includes additional services, called Mobile Modular Plus, that provide more complete solutions for customers.
Portable Storage
This segment provides temporary storage solutions to a wide range of industries, including retail, construction, and manufacturing. It rents out large, secure steel containers that can be delivered directly to a customer's location. Businesses pay for these containers when they need extra space to store materials or inventory on a temporary basis. This part of the company has grown in part through acquiring other regional storage container companies.
TRS-RenTelco
This division rents and sells specialized electronic test equipment. Their customers are typically in high-tech industries like aerospace, defense, and telecommunications. Instead of buying very expensive and highly technical equipment like oscilloscopes or network analyzers, these companies rent them for research, development, or fieldwork. This segment is more centralized and relies on technical expertise to serve its customers across the country.
Enviroplex
This is the manufacturing part of the company, and it's a smaller piece of the overall business. Enviroplex specifically builds and sells portable classrooms directly to public schools and other educational institutions in California. Unlike the other segments that primarily focus on renting, Enviroplex is focused on manufacturing and selling new buildings.
What management is betting on now
The company's leadership is focused on growing its main modular building and portable storage businesses. A key part of their strategy is expanding into new geographic markets and providing more services to existing customers. They are also investing in their rental fleet (the collection of equipment they own and rent out) to meet demand, especially for large-scale industrial and technology projects. Consistently increasing the dividend (a payment made to shareholders) has been a long-term priority, showing a focus on returning value to the company's owners.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$193.02M
FY2024 Q4
$32.62M
FY2025 Q1
$49.89M
FY2025 Q2
$38.18M
FY2025 Q3
$53.46M
FY2025 Q4
$69.77M
FY2026 Q1
$34.33M
FY2026 Q2
$51.97M
Revenue
$221.11M
Net income
$33.67M
Diluted EPS
1.37
Operating cash flow
$63.33M
Free cash flow
$51.97M
Fetching…
Sources
Revenue
$198.54M
Net income
$27.03M
Diluted EPS
1.10
Operating cash flow
$42.37M
Free cash flow
$34.33M
Fetching…
Sources
Revenue
$256.76M
Net income
$49.83M
Diluted EPS
2.02
Operating cash flow
$80.92M
Free cash flow
$69.77M
Fetching…
Sources
Revenue
$256.44M
Net income
$42.30M
Diluted EPS
1.72
Operating cash flow
$65.07M
Free cash flow
$53.46M
Fetching…
Sources
Revenue
$235.62M
Net income
$35.97M
Diluted EPS
1.46
Operating cash flow
$55.81M
Free cash flow
$38.18M
Fetching…
Sources
Revenue
$195.42M
Net income
$28.21M
Diluted EPS
1.15
Operating cash flow
$53.88M
Free cash flow
$49.89M
Fetching…
Sources
Revenue
$243.75M
Net income
$38.94M
Diluted EPS
1.58
Operating cash flow
$36.78M
Free cash flow
$32.62M
Fetching…
Sources
Revenue
$266.76M
Net income
$149.32M
Diluted EPS
6.08
Operating cash flow
$198.97M
Free cash flow
$193.02M
Fetching…
Sources
Is it cheap or expensive?
Fair value $177.12 vs current price $111.61
Wall Street consensus is the average analyst price target: $145.40 (-17.9% lower than our fair-value estimate).
Our most-likely fair value is $177.12 a share — about 58.7% above today's price of $111.61, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $585.5M. Interest coverage 8.0x.
Net debt
$585.52M
Interest coverage
7.96x
McGrath RentCorp's profit covers its interest bill about 8.0 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Watch
Worse cushion
Baseline
Better cushion
MGRC
BASELINE
McGrath RentCorp
Total debt $589.89M Interest coverage 7.96x This is the baseline the peer rows are being compared against.
Total debt $3.79B Interest coverage 2.09x -74% vs MGRC Carries about 3.8x less debt cushion than MGRC.
Total debt $9.56B Interest coverage 1.50x -81% vs MGRC Carries about 5.3x less debt cushion than MGRC.
Total debt $2.55B Interest coverage 0.90x -89% vs MGRC Carries about 8.9x less debt cushion than MGRC.
Total debt $8.45B Interest coverage 2.74x -66% vs MGRC Carries about 2.9x less debt cushion than MGRC.
Total debt $12.48B Interest coverage 1.36x -83% vs MGRC Carries about 5.8x less debt cushion than MGRC.
What you should know
The case for and against MGRC
3 Rewards
3 Risks
Rewards
-
Returns 12.7% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 10/10 years.
-
Trades at 18.0x P/E vs peer median 51.9x (65.4% cheaper).
Risks
-
Net debt grew 24.7% over 3 years.
-
Stock trades 8.6% above its 5-year average P/E.
-
Insider ownership is only 1.1% (peer median: 2.6%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
17.97x
Forward P/E
16.07x
P/B
2.19x
P/S
2.92x
EV/EBITDA
12.83x
PEG ratio
1.02x
Profitability
How much profit each dollar creates
Gross margin
48.5%
Operating margin
23.3%
Net margin
16.4%
ROE
12.7%
ROA
6.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.47x
Current ratio
1.84x
Quick ratio
1.19x
Total debt
$589.89M
Total cash
$4.38M
Growth
How the business has been compounding
Revenue TTM
$932.86M
Revenue 5Y CAGR
15.3%
EPS TTM
6.21
EPS 5Y CAGR
10.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$251.68M
Free CF TTM
$211.30M
FCF margin
22.7%
Dividend
Shareholder payout
Yield
1.8%
Payout ratio
31.4%
Last ex-div date
2026-07-17